First stab at acquisition by Australia's South32 hits competition hurdle

Reuters Staff

2 Min Read

SYDNEY, Feb 23 (Reuters) - The first attempt at an acquisition by Australia’s South32 following its spinoff from BHP Billiton has raised competition concerns with regulators over control of the domestic coking coal market.

Australia’s chief competition regulator on Thursday said it was concerned South32’s proposed $200 million acquisition of Peabody Energy’s Metropolitan colliery in Australia could curb competition in the supply of coking coal in the domestic market.

The acquisition would also include a 16.67 percent stake in a nearby coal terminal.

South32 would become the only large supplier of coking coal to the eastern Illawarra steelmaking hub, the Australian Competition and Consumer Commission (ACCC) said in a preliminary statement on Thursday.

South32 announced the deal with Peabody on Nov. 3, saying the mine would work well with its existing operations.

In a statement emailed to Reuters, South32 said it would continue to engage with the ACCC and that it expected a final decision from the regulator on April 6.

South32 is a collection of smaller assets spun off from mining giant BHP in 2015. Until recently it was openly pursuing the remaining 40 percent of a manganese mining and smelting business located in Australia and South Africa it jointly owns with Anglo American.

South32 Chief Executive Graham Kerr this month said that his company was still interested in Anglo American’s stake at the right price, but that the transaction was not seen as a necessity.